FATCA me if you can: Hong Kong should learn from Israel

Israeli politicians occasionally risk the ire of their American allies. Some have successfully challenged legislation in court to slow the implementation of FATCA-related legislation. Watch and learn, Hong Kong.

As the United States continues to bring country after country to their knees to comply with its Foreign Account Tax Compliance Act (FATCA), a proactive local business and political sector in Israel has moved to resist regulators in Washington.

In early November, the Republican Overseas Israel/Republican Abroad Israel launched a successful lobbying effort against the Israel Tax Authority’s bill to implement FATCA’s automatic data transfer and mass privacy waiver provisions and brought it to a halt- for now. The vote by the Knesset Plenum (the Israeli parliament) was postponed and its Finance Committee agreed that the legislation should be reviewed in a manner that would allow the US-Israeli taxpaying public to voice their concerns before it is tabled to the committee some time next year.

Mr Zell quoted Finance Committee Chairman, MK Rabbi Moshe Gafni, who said: “We are different from the rest of the world. We are very sensitive about this matter, because we are concerned that foreign tax authorities may be seeking this information for improper purposes.”

Most of the world, Hong Kong included, has implemented FATCA requirements as a necessary, if unwelcome, price to pay for participating in a global financial system where America plays a dominant role. However, the Israeli case shows at least one jurisdiction is making an efforts to address the concerns of its citizens about this intrusive, globe-spanning regulatory regulatory burden.

Alex Fok is a Harbour Times journalist monitoring Hong Kong’s daily political scene and diplomatic updates. He obtained his bachelor’s degree in Economics, Politics and International Studies from University of Warwick and his master’s degree in International Relations from the London School of Economics and Political Science. He is a former committee member of the Warwick-based Hong Kong Public Affairs and Social Service Society (WHKPASS) and was the chief editor of the society’s magazine – PASSTIMES.

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SomebodySmart

Here’s one real problem: You’re a bank with no U.S.A.-based assets and no U.S.A. locations. Therefore, you can avoid having to obey U.S.A. laws by simply staying out of that country and using your head. Of course, bomb threats and crazy stuff like that are punished under the laws of the country where they are received. However, in I.G.A. countries the local government must require banks to comply with FATCA anyway, which means registering with I.R.S. and providing correct information. Why should the bank have to obey U.S.A. requirements?

Here’s another problem: Under local laws, the depositor is only a local citizen, but under U.S.A. laws the person is considered a U.S.A. citizen, and under FATCA the bank must treat the person as such, even though U.S.A. laws end at the border.

Dump the IGA’s and let each bank decide. In Zimbabwe there is no IGA and some banks are not registered with FATCA. The beautiful thing is, the US dollar is the official currency and the cheques will clear through the FATCA-exempt central bank.

If some banks won’t register, they save the costs, and can offer better interest rates, driving the FATCA-compliant banks out of business.

You know what’s next? The USA military threatening to bomb other countries if they don’t do as they are told by the USA-BULLY-GOV’T. Just wait & see…The rest of the world needs to wake up, band together, & JUST SAY NO!